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Thoughts On The Deutsche Bank Sale Process For Meru Networks

|About: Meru Networks, Inc. (MERU), Includes: HIVE, NTGR


Bottom fishing buyers put floor on MERU stock price.

Company trading at less than 0.4x revenues.

Needs Board to agree to reasonable offers (i.e. in $2.50 range) and not go it alone.

My theory why the Meru's (NASDAQ:MERU) stock tanked is that one of the logical buyers of this company, namely Dell, struck a deal with Aerohive (NYSE:HIVE) and declined to purchase Meru. Now, there are not a lot of other potential buyers left. HP is out (bought Aruba), IBM and Oracle are more focused on large enterprises. One company that is left is Netgear (NASDAQ:NTGR). They are notoriously cheap, so wouldn't pay top $'s for this, but at 0.35x revenues the company seems cheap. I bet that ntgr would buy meru for $2.50/share, but probably not much more. There should be a ton of synergies in sales and in R&D. Puts a floor on the stock price. I just hope that the Board doesn't try to go it alone, raise capital at very expensive terms and still fail.... At least it looks like the company won't run out of money this year, so they have some time to find a decent offer. Go for the singles and doubles, not for the home runs!

Disclosure: The author is long MERU.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.